Abstract:

Innovation has become a mandatory for organizations and the most important engine of growth. Companies are trying to anticipate the changing business environment, build

competitive products and services that engage customers and outperform competition. However, this has been challenging, and hence there is a need for new approach to organize innovation process that engage external world, including customers. New product development process should also be intensified, and companies should be enriched by external knowledge outside the company. Hence, there is a need for shift in innovation from closed to open innovation. Furthermore, companies should understand that users play a major role in development of products and services. Hence, there is a need for user-centric innovation.

One approach to exploit these three areas is living lab. It is a user-centric, open innovation ecosystem in a real-life environment where users and producers co-create innovations. Living lab emphasizes the idea that user-centric solutions lead to a new form of productivity and competitiveness. Furthermore, it is a method to provide more structure and governance for innovation, and especially open innovation activities.

The research was part of the ongoing innovation agenda of case organization. This innovation agenda has been supported by IBM where the researcher currently works. The

research was conducted as a qualitative single case study. The empirical data was gathered from 11 thematic interviews and one workshop. Additionally, selected written materials

provided by case organization and IBM were used to provide background information. The empirical data was analyzed by using analytic induction.

The primary research question is: ´How does living lab foster organization´s strategy

and innovativeness?´. Additionally, the paper explores the background of living lab, the purpose of living lab, and its integration to strategy and innovation within the case company. The study aims to provide a view into the living lab approach as a tool to exploit open innovation and user-centric innovation, as well as achieving growth.

As a result of the study living lab is a method to implement strategy and thus achieving strategic objectives. However, living lab can also challenge and reshape the existing strategy through innovation. From innovation perspective, living lab exploits open innovation and user-centric innovation. Hence, living lab enables collaborative innovation and thus improves the innovativeness of the company, as well as growth.